Credit Fix for U.S. Service Members — What You Should Know

It is an undeniable fact: the men and women of the armed forces make huge sacrifices for our country. Last year, the number of service members in the Army, Navy, Marine Corps, Air Force, and Coast Guard totaled 3 million—with 1.5 million on active duty and another 1.5 million in the Reserves. These people devote their time and risk their lives, but what else are they risking?

Many service members live with the notion that they may be called to active duty at any time. The threat of leaving current employment and family behind can be daunting for even the thriftiest household. Despite their admirable commitment, financial responsibilities can cause hesitation for even the most patriotic American. So, how does the U.S. government address these concerns?

In 2003, the Service member’s Civil Relief Act (SCRA) was enacted as a revision to the Soldiers’ and Sailors’ Civil Relief Act (SSCRA) of 1940. The Act is meant to provide certain relief and protections regarding outstanding financial obligations so that service members may focus on their military commitments. The SCRA offers protection to those who are:

  • Entering the military
  • Called to active duty
  • About to be deployed

What qualifies as relief? For those concerned about a credit fix post-military, the SCRA covers:

  • Outstanding credit card debt (charged prior to military service)
  • Credit card interest for active duty members (limiting the maximum to 6 percent)
  • Mortgage payments
  • Lease payments of up to $2,932.31 per month
  • Legal battles, e.g., lawsuits or trials
  • Taxes, including protection for spouses who live outside their state of permanent residence and may face double taxation
  • Lease terminations
  • Life insurance policy payments

If you are considering a military career, the SCRA is likely to be a welcome source of comfort for you and your family. However, it is important to understand the Act’s limitations and that it sometimes changes over time. Be sure to review the entire Act to learn more about your options. National security is important, but so are the lives of 3 million service members. Avoid unnecessary stresses, credit fixes, and overdue payments by doing your homework. Not only will learning more about the SCRA provide you with peace of mind, it will help you take a step further into dedicated military service.